I read a couple articles today about Coke's recent earning report, and they mentioned that Coke has a cross-licensing deal with Dr. Pepper... and that it's been a very good thing for Coke.

What does "cross-licensing" mean? I actually thought it was Pepsi who had some kind of bottling deal with Dr. Pepper.

DrPepperIsGood

10-19-2011, 03:11 PM

Well both Coke and Pepsi in certain areas distribute DrPepper, and/or other brands the DrPepper Snapple Group owns... not just on store shelves but restaurant equipment as well. There are certain areas the DrPepper company doesn't have its own distribution centers, or strong sales areas from using 3rd party distributors... so they make the decision to go with who can sell the most and make them the most and in some areas it will be with the competition so to speak.

Keep in mind up until the last few years, the distribution system of DrPepper was much smaller as they have been slowly buying up distributors, as well as Coke/Pepsi buying up the independents who distributed their products... most were privately owned companies and not "corporate" as most people think when they see a truck rolling down the road. I believe Coke/Pepsi are over 90% owned by corporate now where-as a few years ago it was maybe half that?

But yeah if a certain flavor sells well in an area, it pays to distribute it, even if you don't own it you're making money off it right, so they get the 20 year deals and make some money off another guys stuff... DrPepper is often in a great position to swing cases to either company when those licenses come up for renewal, giving one more or less control in a market they don't distribute themselves... although they've been trying to move more brands lately in-house where they do have a network to self-distribute directly without a 3rd party.

fusion

10-20-2011, 05:14 PM

Depending on the area, Dr Pepper could be distributed by PBC, CCR, DPSBG, indie Coke/Pepsi/DPS bottlers, or other distributors.

Franchises were sold back when Dr Pepper was an independent company, and most of the bottlers were small operators. Over time, through acquisitions, the bottlers got bigger and bigger, but kept the allied brands that were making a lot of money, like Dr Pepper.

After Coke and Pepsi acquired their largest bottlers, they negotiated new contracts with Dr Pepper Snapple. They relinquished rights to most brands they carried in limited areas, like Vernors, Squirt, Cactus Cooler, and so on. Coke gave up Canada Dry everywhere except parts of the Northeast (Polar Beverages has Seagram's), and took Seagram's pretty much nationwide. Pepsi gave up Vernors and Canada Dry to DPS, and Seagram's to Coke in areas where they had those brands, and went with Schweppes. Pepsi also kept Crush.

SamC

10-21-2011, 07:58 AM

Two things.

First, in 1995, KO tried to buy the Dr Pepper company itself. The FTC would not let KO do that, due to anti-trust. However, the FTC only has jurisdiction in the USA. So, the trademark itself is owned by two companies. In the USA, Canada, Mexico, and some of continental Europe, it belongs to Dr Pepper Snapple Group. However, in most of the rest of the world, KO bought the company back in the 90s. So, for example, Dr Pepper in the UK is a much a "Coke Product" as is Sprite. If you go to KO's corporate website, you will find Dr Pepper listed with every other product.

Second, as stated, bottling contracts are complex in the USA. In some parts of the country, the Coke bottler will distribute the product. In others the Pepsi bottler will, and in others a "third tier" bottler will. You can sort of tell by what type of bottle the product is sold in, and by what company's products it is on sale with.

ATownAndrew

10-22-2011, 05:35 AM

In Southern Cal and the Central Coast part of California (up to the San Luis Obispo/Monterey County line) Coke distributes Dr Pepper and has so for years and has DP in all the Coke vending machines and coolers. The only competition DP has here is store brand "Doctor" sodas. Pepsi has no Dr sodas here but I will see Dr. Pepper in both Coke and Pepsi fountain machines (I can't explain that one). Occasionally I will see Pibb Xtra in a Coke fountain (like Chipotle) but most Coke fountains here have DP. Even McDonald's which had Pibb Xtra in all its fountains switched to DP over a year ago and they added Diet DP too. One will not find Pibb Xtra in cans/bottles south of the SLO/Monterey county line in CA (where I live) but will still find Pibb Xtra north of here where Pepsi bottles DP (Nor Cal/Central Valley CA). On an unrelated note I tried DP Ten for the first time today - not too bad, definitely better than Diet DP, though not as good as regular. Looks like DP has its version of Coke Zero/Pepsi Max.

popologist

10-22-2011, 04:43 PM

I was not aware of what SamC said.

fusion

11-04-2011, 12:21 AM

I was not aware of what SamC said.

Most of it is pretty dead on, except for one part... You can't always tell who distributes it based on what products it goes on sale with.

Case in point. Dr Pepper in eastern Maryland. At the ShopRite stores in Maryland, Dr Pepper is included in Coke sales, even though it's distributed by Pepsi, and Coke has Pibb.

My guess is that for simplicity's sake, ShopRite includes it in Coke ads across the chain. I believe in pretty much every other area where there is a ShopRite, Coke has Dr Pepper.

Either that, or DPS contracted with ShopRite to include it in the sales. That seems less likely, though.

There are also times where ShopRite will run a standalone Dr Pepper ad, like 99? 2Ls, or 2/$6 cans. They ran a standalone can ad when 10 came out here.

Pepsi loses out when they run a 20 pack can ad, though, because they don't carry 20 packs in northeastern MD (indie distributor). The ad this week is a 20 pack for $4.77 when you spend $25 (grand reopening sale for partial remodels at two of the stores).

hitokage

11-04-2011, 05:23 AM

The sales seem to be dependent on how a particular chain handles them - i.e. some seem to do it based on who the bottler is in the area where their corporate office is located. For instance Giant Food of Landover, MD (I don't know about other Royal Ahold chains) puts Dr Pepper on sale with Pepsi products (I have never seen their ad include a picture of Dr Pepper), and at most of their stores it is bottled/delivered by Pepsi. However, areas such as Frederick, MD it also goes on sale, but it comes from RC Winchester. Weis on the other hand, seems to keep it tied to the bottler. When Pepsi goes on sale Dr Pepper isn't included in Frederick, but if I visit the Weis in Mt. Airy, MD (Carroll County) it is on sale.

fusion

11-09-2011, 09:51 PM

Giant Carlisle ties the sales to the distributor. At the Martin's in Rising Sun, MD (which I service), it goes on sale with Pepsi products, but at the Giant stores in our Philadelphia MU, where we distribute Dr Pepper, it goes on sale with Coke. And at the Giant Landover store near my house, it is also included in the Coke ads.

And to the point about the fountain availability comment above, there are national fountain accounts, where the bag in boxes (BIBs) usually come from the restaurant's foodservice distributor, and the contracts are signed nationally, and there are local accounts, where the BIBs usually come from the Coke/Pepsi distributor. The local fountains will probably have whatever spicy cherry that the distributor has (if any), whereas the national chains tend to all carry Dr Pepper, as they have signed a contract with the chain to be carried on their fountains, regardless of whoever distributes bottle/can Dr Pepper in an area.

Of course it's not that simple. There are plenty of exceptions.. like Dairy Queen, who allows each franchisee to choose their beverage supplier (interesting, since Warren Buffet, a big Coke investor, owns the company via his Berkshire Hathaway company). Arby's was also a split company, as was Wendy's. Now the first is Pepsi, the second is Coke. The change was phased in over a period of time... and also interesting since the two were once the same company (but have since broken up). Makes it a bit hard for the chain to run national promotions, since they have to either exclude the beverage entirely from the promotion, or tailor it to the local market.

Local accounts are up for grabs, depending on what supplier the restaurant goes with, and how long they sign a contract for. Makes it a bit difficult for us, as when in uniform, we are strongly discouraged from consuming the competitor's beverages. A local place I try to visit often (but sometimes can't due to scheduling issues) changed from Coke to Pepsi fairly recently, but luckily I had stopped by there after work, and was wearing my own sweatshirt, lol.

hitokage

11-10-2011, 05:16 AM

That's interesting about Giant of Landover. As I mentioned in Frederick County, Dr Pepper isn't bottled/distributed by Coke or Pepsi, but Giant (and Safeway) still puts in sale with the Pepsi stuff - hence why I thought they did that in other areas. I don't visit the Martin's in Hagerstown enough (there aren't any here any more due to the Royal Ahold purchase of Giant of Landover), so I'm not sure how they handle it, but based on what you said it probably goes on sale with the rest of the RC Winchester products.

ATownAndrew

11-11-2011, 06:24 AM

And to the point about the fountain availability comment above, there are national fountain accounts, where the bag in boxes (BIBs) usually come from the restaurant's foodservice distributor, and the contracts are signed nationally, and there are local accounts, where the BIBs usually come from the Coke/Pepsi distributor. The local fountains will probably have whatever spicy cherry that the distributor has (if any), whereas the national chains tend to all carry Dr Pepper, as they have signed a contract with the chain to be carried on their fountains, regardless of whoever distributes bottle/can Dr Pepper in an area.

Of course it's not that simple. There are plenty of exceptions.. like Dairy Queen, who allows each franchisee to choose their beverage supplier (interesting, since Warren Buffet, a big Coke investor, owns the company via his Berkshire Hathaway company). Arby's was also a split company, as was Wendy's. Now the first is Pepsi, the second is Coke. The change was phased in over a period of time... and also interesting since the two were once the same company (but have since broken up). Makes it a bit hard for the chain to run national promotions, since they have to either exclude the beverage entirely from the promotion, or tailor it to the local market.

Local accounts are up for grabs, depending on what supplier the restaurant goes with, and how long they sign a contract for. Makes it a bit difficult for us, as when in uniform, we are strongly discouraged from consuming the competitor's beverages. A local place I try to visit often (but sometimes can't due to scheduling issues) changed from Coke to Pepsi fairly recently, but luckily I had stopped by there after work, and was wearing my own sweatshirt, lol.

Good explanation. My local Coke distributor does Dr Pepper, so places that have Pibb Xtra like Chipotle may have a national contract with Pibb Xtra (like for many years when McDonalds was serving Pibb). This also explains why McD's, BK, Carl's Jr, Jack in the Box, In-N-Out, Wendy's, and Taco Bell all serve Dr Pepper.